The Volkswagen Effect

Frankly, I’m not sure we should be so surprised by things like this anymore.

A company like Volkswagen, who had spent years cultivating and nurturing one of the most loyal fan bases in business turns out to be lying and deceptively cheating the very people they’ve depended on most!

They were flat out lying to the people who helped make VW the brand it is today. It wasn’t the engineers or the leadership who made VW, VW; it was the customer!

We can learn a powerful lesson Volkswagen’s mistake and ensure it doesn’t happen in your company.

I call it the Volkswagen Effect.

In the first quadrant, we find the intersection between a company’s core purpose and their pursuit of profits. If you have a clear core purpose with powerful business objectives but a disregard for your customer, then you’ll erode the customer’s trust by doing things guided by weak direction and vacuous decisions. Too many companies are willing to lie, cheat, and steal to get ahead at whatever cost. They’re driving recklessly. Naturally, this type of growth is never sustainable.

Next, we have the intersection between the pursuit of profits and customer centricity. If your company has a growth mindset and is focused on the customer, but your day-to-day actions aren’t congruent with your core purpose–raison d’être–then you’re eventually going to get yourself into trouble. You’re stuck in traffic.

This is precisely where Volkswagen messed up, and their aggressive pursuit of revenue has risked everything – close to 80 years of positive brand building is now in jeopardy. Here we find a company pursuing growth and new revenue while attempting to maintain their loyal customer base under a shroud of lies!

In this case, it was easier to lie than to solve the complex engineering challenges at hand, or to avoid embarrassment, or to simply tell management that what they were demanding just couldn’t be done. Ego played a part, sure, and when the unsolvable proved to be unsolvable, they decided to risk their single most valuable asset.

In the third quadrant, we find companies driven by purpose and delivering customer value without strong business objectives. Companies stuck here seem to drive around in circles and never get anywhere meaningful.

In the middle, we find a company with a clear windshield, accurate directions, optimal driving conditions. I think VW was on a wonderful road trip for a long time, I really do. But somewhere along the way they put some bad fuel in the engine.

If you can find and maintain this optimal balance, your company will win every single time – for a long time. But if you head off-road in any one of the key areas it’s always incredibly difficult to get back on track.

And if EVER find yourself taking your customers for a ride, then it’s time to pull the emergency brake.